Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 15, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Block assessment - AO is bound to record the satisfaction within the meaning of section 158BD of the Income-tax Act, 1961 within the two-year time period stipulated in section 158BE(1) - HC
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Revision power u/s 264 - CIT committed a manifest error in exercising revisional power when petitioner's appeal was pending before CIT (Appeals) - HC
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Validity of order u/s 127 - No prejudice is caused by the mere fact of a Section 127 order, such that detailed reasons and specific grounds are required to be provided, as the petitioner today argues - HC
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Nature of receipt - Whether capital or revenue - It is a nature of entitlement to reduce carbon emission, however, there is no cost of acquisition or cost of production to get this entitlement - Carbon credit is not in the nature of profit or in the nature of income. - AT
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Deduction under section 10B - merger of the firm - As long as the undertakings are eligible for deduction u/s 10B - the merger of the firm with the assessee does not alter the status of the undertakings - AT
Customs
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Appellant acquired non est, unlawful and illegitimate DEPB scrip from market without causing enquiry with the issuing authority thereof to avoid evil consequence of fraud. - demand / penalty confirmed - AT
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A course of settlement under the Act is available only where the petitioners of their own want to make clean breast of their affairs and not where the petitioner wants to resist the notices by challenging several statements relied upon by the revenue in support of its case. - HC
Service Tax
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Prima-facie, no justification for any bonafide misapprehension on the part of the petitioner, as to the scope of the contours and trajectory of the definition of the expression “real estate agent“ nor any cause for a misconception that the transaction falls outside the purview of this taxable service - AT
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Suo moto adjustment - for the excess service tax paid for the period prior to 01.04.2009 Appellant should have sought refund claim, because such a suo moto adjustment is not permissible as per the existing Service Tax Law - AT
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Waiver of penalty u/s 80 - as the definition of ‘tour operator' is amended with effect from 1.4.2000 and prior to 1.4.2000, the tour operators are exempted from payment of service tax - penalty waived - AT
Central Excise
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Refund - the arguments of the Revenue that only for payment of duty, a dealer of textile goods will be considered as a manufacturer and not for refund of Cenvat credit is not consistent and not in conformity with the policy of the Government - AT
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Penalty u/s 11AC - delayed payment of duty though return was filed in time - tribunal observed that the delay was caused on account of inability of the Bank to give correct password - No penalty - HC
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Default of predecessor company - Liability of successor company - dues due and owing by the assessee cannot be recovered from the properties of the appellant, who is a bona fide purchaser in auction - HC
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Whether appellant can take suo moto credit of excess duty debited for second time payment of duty or they were required to claim in respect of the excess amount debited towards the payment of duty twice over - demand set aside - AT
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CENVAT Credit - Revenue is not disputing the fact of receipt of inputs by the manufacturer. - there is no answer by Revenue as to from where the second stage dealer has received the inputs so as to supply the same to the appellants - demand set aside - AT
VAT
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Exemption from export duty - payment of central sales tax on inter-State sale of alcohol not exempted as per provisions of Section 8 (2-A) of the 1956 Act - HC
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Disallowance of input credit under DVAT – transfer of right to use - Ex facie, the view of the Tribunal with regard to the disallowance of input tax credit appears to be incorrect - HC
Case Laws:
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Income Tax
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2014 (3) TMI 434
Rectification of order - Validity of order passed u/s 245D(6B) of the Act - Revenue was of the view that the closing stock of unsold land was undervalued while estimating the income of the assessee in the order passed by the ITSC - Held that:- The ITSC has followed a particular method of computing the income of the assessee which required to be settled - the method is that there should be a flat rate of net profit, expressed as a percentage of the gross receipts of the assessee - When a flat rate of profit is applied to the gross turn-over and the assessment of the income of the assessee is made in the manner akin to a best judgment assessment, there is no scope for making any separate addition for undervaluation of stock, disallowance of expenditure, other additions under Section 68 etc. - The flat rate assessment as a percentage of the gross turn-over takes care of all possible omissions and if this method of estimating the concealed income of the assessee is adopted by the ITSC, there is no justification for separately making any addition towards alleged undervaluation of the stock. The fact that there was a difference of opinion between the members of the ITSC while examining the application of the Revenue shows that the matter is in any case not free from debate which takes it out of the purview of the provisions of Section 245D (6B) of the Act – Decided against Revenue.
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2014 (3) TMI 433
Deletion of amount made – Addition u/s 68 - unsecured loans from NRI - Held that:- Substantial amounts which were routed through the NRI’s accounts emanated from the assessee’s accounts or the overdraft account maintained by him - the essential character of the loan as disclosed by him was something verifiable even at the CIT (Appeals)’s stage in view of the bank statements furnished – keeping in view the Tribunal’s findings on the issue of the quantum of addition that was deleted, as such there is no substantial question of law arises for consideration – Decided against Revenue.
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2014 (3) TMI 432
Requirement of recording satisfaction u/s 158BD of the Act - Search u/s 158BC of the Act – Block Assessment conducted - Whether the assessing officer is bound to record satisfaction within the meaning of section 158BD of the Act during the process of assessment of the person searched under section 158BC of the Act – Held that:- The decision in CIT v. UmeshChandra Gupta [2014 (2) TMI 521 - DELHI HIGH COURT] followed - the jurisdiction to issue the notice under section 158BD and the consequent time period prescribed under section 158BE in respect of third parties gets defined within the two years’ time period given to the assessing officer of the searched person under section 158BE (1) of the Act - the terminal date as per the decision of Division Bench of this Court would be the end of the two-year period prescribed in section 158BE (1) of the Act. The assessing officer is bound to record the satisfaction within the meaning of section 158BD of the Income-tax Act, 1961 within the two-year time period stipulated in section 158BE(1) of the said Act - since the satisfaction was recorded beyond that period, the assessment proceedings are without jurisdiction – the order passed by the Income Tax Appellate Tribunal the assessment proceedings are set aside – Decided in favour of Assessee.
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2014 (3) TMI 431
Revision power u/s 264 of the Act – Withdrawal of application - Whether mere filing of a withdrawal application in an appeal per se amounts to withdrawal of appeal or waiver of right of appeal – Held that:- Assessee is not correct in asserting that as soon as he filed application for withdrawal of appeal, it would result in a situation where the assessee can be said to have waived his right of appeal - This presumption is thoroughly misconceived - It pre-conceives a situation that as soon as an application for withdrawal is filed, the appeal is deemed withdrawn as if the authority concerned, where appeal is pending, has no otherwise power or right in respect of pending appeal - there is no provision under the Act, 1961, which contemplates such a situation - Relying upon Rajendra Prasad Gupta Vs. Prakash Chandra Mishra and others [2011 (1) TMI 175 - SUPREME COURT OF INDIA] - there is no provision which permits withdrawal of an appeal, once it is filed, and registered - once right of appeal is exhausted, by party concerned, and the appeal is filed before appropriate Appellate Authority, who after receiving same has registered it, there is no provision in the statute permitting withdrawal. Mere filing of an application seeking withdrawal of appeal would not have resulted as if the appeal stood withdrawn or deemed withdrawn unless an order is passed by Appellate Authority thereon for the reason that appellant could have always requested Appellate Authority not to pass any order on his withdrawal application since he does not press it and he could have the proceeded with his appeal - appeal continued to remain pending even if application was filed by petitioner seeking withdrawal of appeal - On the date when revision was filed by petitioner or when CIT passed order on petitioner's revision, petitioner's appeal, as a matter of fact, was pending before Appellate Authority. Hence the Revisional Authority was barred from revising order of Assessing Authority by virtue of sub-section (4) of Section 264 of Act, 1961. CIT committed a manifest error in exercising revisional power when petitioner's appeal was pending before CIT (Appeals) - The revision order was wholly without jurisdiction - thus, it has rightly been recalled - The Appellate Authority has rightly proceeded to decide appeal in view of the fact that petitioner did not press his application for withdrawal of appeal and more so in the light of judgment of Apex Court CIT Vs. Rai Bahadur Hardutroy Motilal Chamaria [1967 (4) TMI 8 - SUPREME Court] - the appeal filed could not have been withdrawn – Decided against Assessee.
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2014 (3) TMI 430
Validity of order u/s 127 of the Act - Power to transfer cases - Transfer of Jurisdiction – Held that:- An order of transfer is passed for the purpose of assessment of income - It serves a larger purpose - Such an order has to be passed in public interest - The purpose of a Section 127 transfer is not to subject the petitioner to any tax liability, or even undergo any other obligation onerous or otherwise, but rather, only to direct that the regular assessment (as is carried out in the usual course of events) will be conducted by an AO other than the jurisdictional AO in order to ensure coordinated investigation. Revenue does not rely on the mere plea or assertion of coordinated investigation – Rather provided a context of the need for such a coordinate investigation, given the various limbs and branches of the entities involved in the Eldeco Group and their varying business connections - the very purpose of the Section 127 order in the case is to ensure than an orderly and coordinated investigation takes place while conducting the assessment of the various entities involved - the Supreme Court has also recognized that a Section 127 order does not by itself cause any prejudice to the assesee, and given that due deference must be granted to the Revenue in such matters, the limits of review of such orders is narrow. In Kashiram Agarwala v. Union of India, [1964 (10) TMI 8 - SUPREME Court]. The assessee also has the opportunity to present his case, and be subject to a regular assessment, in front of the AO to whom jurisdiction has been transferred - No prejudice is caused by the mere fact of a Section 127 order, such that detailed reasons and specific grounds are required to be provided, as the petitioner today argues - the show-cause notice granted the petitioner in the case an opportunity of being heard - No oral representation was made by the petitioner on that date, nor was any request for another date made to the Commissioner - thus, the argument that no chance to effectively represent the case was provided has no merit – Decided against Assessee.
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2014 (3) TMI 429
Scrap sale – Deduction u/s 80HHC and 80HHE of the Act –Held that:- The decision in Commissioner of Income-tax Versus Motor Industries Co. Ltd. [2009 (12) TMI 411 - KARNATAKA HIGH COURT] followed - while computing the total turnover for the purpose of section 80HHC, the Assessing Officer is required to consider the value received by the sale of scrap also, as it cannot be excluded as the sale of scrap amount to a turnover in the domestic market - The excise duty paid by assessee for selling scrap has to be excluded – Decided against Revenue. Exclusion of scrap sale from the turnover – Held that:- The decision in Commissioner of Income-tax Versus Motor Industries Co. Ltd. [2010 (8) TMI 333 - Karnataka High Court] followed - The developmental work is intimately connected with the business of manufacture and sale of goods by the assessee - consideration received for developmental work is not liable to be deducted in computing the profits of the business – Decided against Revenue.
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2014 (3) TMI 428
Nature of receipt - Whether capital or revenue - Clean development mechanism by realizing carbon credit – Held that:- The decision in My Home Power Ltd. Versus Deputy Commissioner of Income-tax, Central Circle - 7 [2012 (11) TMI 288 - ITAT HYDERABAD] followed - the consideration received on account of carbon credits cannot be considered as income as taxable in the assessment year under consideration - Carbon credit is not an offshoot of business but an offshoot of environmental concerns - No asset is generated in the course of business but it is generated due to environmental concerns - Credit for reducing carbon emission or greenhouse effect can be transferred to another party in need of reduction of carbon emission - It does not increase profit in any manner and does not need any expenses - It is a nature of entitlement to reduce carbon emission, however, there is no cost of acquisition or cost of production to get this entitlement - Carbon credit is not in the nature of profit or in the nature of income. Self- generated Certified Emission Reductions (CERs) - CERs are inventories of the generating entities as they are generated and held for the purpose of sale in ordinary course - Since CERs are recognised as inventories, the generating assessee should apply AS-9 to recognise revenue in respect of sale of CERs – thus, the sale of carbon credits is to be considered as capital receipt – the CIT(A) has erred in confirming addition made by the Assessing Officer holding that the realization of carbon credit in question by the assessee gives rise to a revenue receipt – Decided in favour of Assessee. Delayed payment of TDS – Interest on TDS – Held that:- The sole reason given by the authorities below is that before making the addition, the party at whose instance the assessee had stated to have paid the amount did not support its plea and the amount had been written off as sundry expenses – thus, there is no reason to delete the addition made – Decided against Assessee. TNEB interest for security deposit – Held that:- The AO holds that necessary intimation of credit in question was received on 03.10.2009, i.e. in the previous year relevant to the succeeding assessment year 2010-11 - The assessee also submits that it had included the amount as income for the purpose of assessment in the next assessment year instead of impugned assessment year – it would be appropriate to observe that in case the Assessing Officer has already treated the amount as income in the assessment year 2010-11, the addition in question would stand deleted in favour of the assessee.
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2014 (3) TMI 427
Condonation of delay delay of 148 days C.O. filed in different office - bona fide mistake Relying upon Collector, Land Acquisition V MST Katiji [1987 (2) TMI 61 - SUPREME Court] - every day s delay must be explained does not mean that a pedantic approach should be taken The contention of the assessee that the delay in filing the C.O. for the said 148 days was not deliberate as the petitioner certainly would not wantonly jeopardize its own case was accepted - there shall be no loss to revenue as legitimate taxes payable in accordance with law alone will be collected Decided in favour of assessee. Deduction under section 10B - merger of the firm Held that:- Unit of the assessee firm is a 100% EOU unit entitled for deduction under section 10B of the Act - it is not true that the law recognises merger of only companies and not the merger of firms -the limitations specified in subsections 9 and 9A of section 10B of the Act do not exist from 1.4.2004 - conclusion of the AO that deduction u/s 10B cannot be granted on the merger of firms is not correct - Decided against revenue. It is a settled principle that deduction under section 10B of the Act is granted to an undertaking and not an assessee assessee relied on the CBDT Circular No.1/2013 in F.No.178/84/2012 dt.17.1.2013 - as long as the undertakings remain eligible for deduction under section 10B the deduction cannot be denied merely on the ground that there has been a merger of the firms which own the undertakings - AO has not rendered any finding that either of the units, one belonging to the assessee and the other belonging to the firm that got merged is not eligible for deduction u/s 10B - both the units / undertakings of the assessee firm and M/s. KMMI Exports are otherwise eligible for deduction u/s 10B and the deduction is towards the undertaking - As long as the undertakings are eligible for deduction under section 10B of the Act - the merger of the firm, M/s. KMMI Exports with the assessee does not alter the status of the undertakings - Decided against Revenue. Disallowance of Prior Period Expenses - Held that:- CIT(A) ought to have first examined the issue of the allowability of the claim and rendered a finding to the effect - Only then should he have examined the assessee's alternate plea for deduction u/s 35D of the Act and for which also he should have rendered proper and cogent reasons for allowing the deduction of 1/5th of the aforesaid expenditure Matter remitted back to CIT(A) for fresh adjudication Decided in favour of Revenue. Disallowance u/s 40A(3) of the Act Held that:- Section 40A(3) of the Act clearly stipulate that the payment is liable for disallowance if it is not made by way of account payee cheque / demand draft - Since the impugned payment was otherwise than by way of an A/C payee cheque / demand draft, the impugned payment is liable for disallowance u/s 40A(3) of the Act - The assessee has also not made out any case under the exceptions provided under Rule 6DD of the I.T. Rules, 1962 - the AO was correct in holding that the aforesaid payment is to be disallowed under section 40A(3) of the Act - Decided in favour of Revenue. Disallowance of excess profits - Transactions with sister concerns Held that:- As it has already been decided that the assessee is entitled for deduction under section 10B of the Act - since a specific objection has been raised on the matter - CIT(A) considered this issue as withdrawn the matter is remanded back to CIT(A) for fresh consideration.
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2014 (3) TMI 426
Disallowance of interest u/s 14A of the Act – Held that:-Disallowance under section 14A read with rule 8D can only be invoked when the assessee has incurred some expenditure on earning of tax exempt income – Relying upon Goetze (India) Ltd. –vs- CIT [2009 (5) TMI 615 - ITAT DELHI] and COMMISSIONER OF INCOME TAX Versus WIMCO SEEDLINGS LTD. [2011 (12) TMI 16 - DELHI HIGH COURT]- the burden is on the AO to establish the nexus of expenses having incurred for earning of exempted income before making disallowance under section 14A - unless it is demonstrated that some expenses have been incurred in earning the tax exempt income, the provision of rule 8D cannot be invoked at all – matter remitted back to the AO for de novo adjudication - Decided in favour of assesse.
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2014 (3) TMI 425
Disallowance of interest u/s. 14A of the Act – explanation and evidences not considered - Held that:- If expenditure is shown to be attributable of a particular source of income or receipt, the same cannot be taken into consideration for computing the disallowance u/s 14A of the Act. The word used in section 14A does not give any room for presumption - the disallowance u/s.14A r.w.r 8D if at all can be made only of being the expenditure directly relatable to the dividend income is allowable for disallowance - Decided partly in favour of assessee.
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Customs
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2014 (3) TMI 424
Determination of Redemption fine and penalty - Import of vehicles / motor cycle - country of manufacture / origin - violation of licensing notes of Chapter 87 of Schedule 1 of the Foreign Trade (Development and Regulation) Act, 1992 - According to revenue goods were of Japanese origin, but imported from United State of America (USA). - Held that:- there is nothing wrong in the finding that the goods were liable to confiscation under section 111 (d) of the Customs Act, 1962. The redemption fine and penalty imposed by the adjudicating authority also appear to be very low as compared to the assessable value of the prohibited goods. - In such a situation, it is only proper that this matter is adjudicated afresh by the adjudicating authority. Matter is remanded to adjudicating authority for a fresh decision - Decided partly in favor of assessee.
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2014 (3) TMI 423
Redemption fine and penalty - Allegation that DEPB Scrip was obtained by fraud - The arguments on behalf of the Appellant are that they purchased the DEPB scrip in good faith against payment of consideration and utilized it under the bonafide belief that the license did not have any blemish. - Held that:- It is an established fact on record that there was no DEPB scrips in existence in the eyes of law for transfer thereof to the appellant for use against discharge of import duty by the appellant. In ICI India Limited v. CC (Port), Calcutta - [2004 (9) TMI 127 - HIGH COURT AT CALCUTTA] as affirmed by Apex Court it has been held that the DEPB scrip is a negotiable instrument and is available in the market. Anyone can purchase it from the market and avail of the credit out of it. But, ultimately if that is found to be forged, fake or not acquired lawfully nor legitimate, credit cannot be derived therefrom. It is also settled principle of common law that a purchaser does not acquire better title if transferor had no title or title is ab initio void. Appellant acquired non est, unlawful and illegitimate DEPB scrip from market without causing enquiry with the issuing authority thereof to avoid evil consequence of fraud. Since fraud was involved, in the eye of law such documents had no existence. Since the documents have been established to be forged or fake, obviously fraud was involved and that was sufficient to extend the period of limitation. - Decided against the assessee and in favor of revenue.
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2014 (3) TMI 422
Valuation of goods - Under valuation of goods - Confiscation u/s 111 - Penalty u/s 112 - Held that:- There is no evidence on record available to prove that the goods under seizure were imported by mis-declaring the value. On the other hand, invoices available on record for the purchase and sale of the goods clearly show that the goods have been purchased from Spices Trading Corporation Ltd. and there is no allegation that the said Corporation has mis-declared the value. Therefore, we set aside the confiscation and fine in lieu of confiscation on the goods which were seized and provisionally released. We also set aside the penalties imposed on M/s. Lalji & Sons, M/s. Radha V. Company and M/s. Poonam Trading Company as there is no evidence to show any involvement on their part in undervaluing the goods which have been imported by Spices Trading Corporation - penalty on Shri Bhumish Shah also will not sustain in the instant case for the reason that the goods under supply were imported by M/s. Spices Trading Corporation and obviously he cannot be a party to mis-declaration in respect of the impugned transactions - Decided in favour of assessee.
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2014 (3) TMI 418
Validity of order passed by the Settlement Commission (Commission) under Section 127B of the Customs Act,1962 - Failure of the petitioner to make full and true disclosure of duty liability under Section 127B(1) of the Act - Held that:- impugned order of the Commission dated 23 October 2012 is a well reasoned order. The petitioners in this case is in receipt of show cause notice dated 28 March 2012 seeking to recover duties of Customs not only in respect of the consignment which was seized but also six earlier consignments. The petitioners in their application sought to settle only the dispute with regard to the seized consignment. Before the Commission the revenue had filed a report opposing the settlement for failure to disclose fully and truly all facts on the part of the petitioners particularly, in respect of the six earlier consignments. Therefore, the petitioners were on notice about the objection of the revenue and they could have led evidence in support yet the petitioner chose to contest the Commissioner's report only on the ground that the statement made by the coapplicant i.e. petitioner No.2 had been retracted and there is nothing on record to indicate that the petitioner had imported glass chatons on six earlier occasions. The order of the Settlement Commission is based on appreciation of facts which were placed before it and its conclusion that the petitioner had not made a true and full disclosure in their settlement application cannot be said to be perverse and/or arbitrary warranting an interference by this Court - A course of settlement under the Act is available only where the petitioners of their own want to make clean breast of their affairs and not where the petitioner wants to resist the notices by challenging several statements relied upon by the revenue in support of its case. In such a case the petitioner would be well advised to seek remedy under the Act in the adjudication process - Decided against assessee.
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Corporate Laws
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2014 (3) TMI 445
Suo-moto enquiry u/s 19(1) of the Act - Determination of sale price - Anti-competitive practice - Whether the BCDA is engaged in anti-competitive practice of directly or indirectly determining the sale price of drugs and controlling the supply of drugs in a concerted manner in violation of Section 3(3)(a) and 3(3)(b) of the Competition Act, 2002 – Held that:- BCDA being an association of its constituent enterprises, is taking decisions relating to distribution and supply of pharma products on behalf of the members who are engaged in similar or identical trade of goods and that such practices carried on, or decisions taken, by BCDA as an association of enterprises are covered within the scope of Section 3(3) of the Act - It is evident from the various minutes that BCDA and its affiliated District and Zonal Committees have taken concerted action against the retailers, largely the chain stores, who have indulged in sale of medicine below MRP by offering discounts to the customers - They had launched organizational movement with effect from 1st April, 2012 against these entities and have tried to enforce their decision regarding sale of drugs on MRP by activating Vigilance and Zonal Committees in the various Districts and Zones of Kolkata - Thus, the contention raised by BCDA that it has not taken any measures against those members who offered medicines at discounts does not appear to hold any trace of truth in it and is bound to be rejected. BCDA has not brought on record any evidence to suggest that the business of significant number of retailers was seriously affected by heavy discounts being offered by big retailers leading to closure of their business which compelled it to pass such resolutions - Even assuming without conceding that the argument put forth by BCDA is based on true facts/actual state of affairs, no such practice or decision which contravenes the law of the land in force can be allowed to continue - irrespective of the provision under which notice was issued, nonetheless an opportunity was given to Shri Tushar Chakraborty to meaningfully respond to the observations of the Commission – thus, there was no violation of principles of natural justice. The Commission holds that the BCDA and its District and Zonal Committees were engaged in anti-competitive practices of directly or indirectly determining the sale prices of drugs and controlling or limiting the supply of drugs through concerted and restrictive practices, in violation of the provisions of Section 3(3)(a) and (b) read with Section 3(1) of the Act - The plea taken by the BCDA that since it has ceased from the practices of opposing sale of drug on discounts or selling them below MRP cannot be accepted – thus, the Commission directs the BCDA and its office bearers & executive committee members to seize and desist from indulging in anticompetitive practices found to be anticompetitive in terms of the provisions of Section 3 of the Act. Penalty u/s 27 of the Act – Held that:- The anticompetitive acts and conducts require to be penalized to cause deterrence in future among the erring entities engaged in such actions - it is required that the degree of punishment is scaled to the severity of the violation - the position of BCDA to control the market of drugs and medicines in its area of operation is undoubted - the conduct of BCDA and its office bearers & executive committee members requires to be sternly dealt with - no mitigating factor is shown by the parties and none is borne out from the records – thus, the Commission decides to impose a penalty on the BCDA and its those office bearers who are directly responsible for running its affairs and play lead role in decision making @10% and on the executive committee members @7%, of their respective turnover/income/receipts based on the financial statements filed by them – Decided against the association.
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Service Tax
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2014 (3) TMI 439
Penalty u/s 76, 77 & 78 - Interest u/s 75 - Failure to obtain registration - real estate agent service - Held that:- prima-facie in the show cause notice as well as in the adjudication order, the authorities have clearly categorised the conduct of the petitioner in failing to obtain registration; in filing returns; and in remitting service tax on the two transactions adverted to, as inter alia in violation of the provisions of the Act with in intent to evade tax. On a true and fair construction of the provisions of Section 65(88) read with Section 65(105)(v) of the Act, prima-facie, we find no justification for any bonafide misapprehension on the part of the petitioner, as to the scope of the contours and trajectory of the definition of the expression "real estate agent" nor any cause for a misconception that the transaction falls outside the purview of this taxable service - Conditional stay granted.
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2014 (3) TMI 438
Classification of service - Erection, commission and installation service or Works contract - Held that:- Matter remanded back following the judgment in the case of G.D. Builders & Others [2013 (11) TMI 1004 - DELHI HIGH COURT] - Decided in favour of assessee.
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2014 (3) TMI 437
Suo moto adjustment - Adjustment of excess tax paid - Adjustment made instead of refund claim - Held that:- It is observed from Ad-hoc exemption Order No. 01/01/2011 issued by GOI, Ministry of Finance under F.No.137/14/2008-Cx.4 dated 01.07.2011 that Service Tax was exempted for CISF for the period from 16.10.1998 to 31.03.2009. However, the Appellant paid certain amounts for the period before 01.04.2009 towards Service Tax which was exempted as per the above ad-hoc exemption order. Instead for seeking refund of the Service Tax paid for the period prior to 01.04.2009 appellant adjusted the same towards Service Tax liability for the period after 01.04.2009 which was objected by the Revenue. It has been correctly held by the First Appellate Authority that for the excess service tax paid for the period prior to 01.04.2009 Appellant should have sought refund claim, because such a suo moto adjustment is not permissible as per the existing Service Tax Law - Decided against assessee.
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2014 (3) TMI 436
Waiver of penalty u/s 80 - non payment of service tax - Tour operator service - Penalty u/s 76, 77 & 78 - Held that:- service of tour operator, becomes taxable with effect from 1.9.1997. There was a Notification No. 52/98-ST exempting payment of service tax from 18.7.1998. The Notification is withdrawn on 1.4.2000 and the definition of ‘tour operator' is amended. We find that as per the provisions of Section 80 of the Finance Act, notwithstanding anything contained in the provisions of Section 76, 77 or 78, no penalty shall be imposable on an assessee for any failure referred to in the said provisions if the assessee proves that there was reasonable cause for the said failure. In the present case, as the definition of ‘tour operator' is amended with effect from 1.4.2000 and prior to 1.4.2000, the tour operators are exempted from payment of service tax. Therefore, in view of the provisions of Section 80 of the Finance Act, we find that it is not a case for imposition of penalties - Decided in favour of assessee.
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Central Excise
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2014 (3) TMI 421
Rejection of refund claim - Utilization of CENVAT Credit - dealer of textile goods - Held that:- in the first round of litigation, Commissioner (A) had allowed refund claims for all goods cleared from the factory of the appellant for export and rejected the refund claims only in respect of the goods which were cleared from the premises of the merchant exporters or other manufacturers. Against this, the appellant came in appeal before the Tribunal and that appeal was allowed without any qualification which would imply that the entire refund which was originally asked forgot sanctioned consequent to the order of the Commissioner (A) and further orders of the Tribunal. So a second round of examination of eligibility for refunds was prima facie unwarranted. Further, it is seen that in the second round of proceedings of refund claims, the adjudicating authority as well as the first appellate authority have relied on new grounds for rejecting the refund claims without even putting the appellant on notice. Therefore, on the basis of principles of natural justice also, the orders in the second round of litigation are not maintainable. Option to the dealer of textile goods to pay duty - When such an option is given, it is to be understood that the option is in respect of all matters related to payment of duty as well as claims of refund consequent to exports and the arguments made by the Revenue that only for payment of duty, a dealer of textile goods will be considered as a manufacturer and not for refund of Cenvat credit is not consistent and not in conformity with the policy of the Government to allow export of goods without incidence of taxes - Following decision of Essar Steel Ltd Vs. UOI [2009 (11) TMI 141 - GUJARAT HIGH COURT] - Decided in favour of assessee.
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2014 (3) TMI 420
Penalty u/s 11AC - delayed payment of duty though return was filed in time - tribunal observed that the delay was caused on account of inability of the Bank to give correct password. - Tribunal reduced penalty - Whether on the facts and in the circumstances of the case the CESTAT, New Delhi has committed an error of law in reducing the penalty levied upon the Respondent from ₹ 11,97,798/- imposed under the provisions of Rule 25 read with Section 11AC to ₹ 5,000/- under Rule 27 of the Central Excise Rules, 2002 - Held that:- as per Rule 25(d) of the Rules subject to the provisions of Section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse or a registered dealer, contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, he is liable to pay the penalty in terms of Rule 25 of the Rules. The Court further observed that a bare perusal of this Rule would suggest that evasion of payment of duty is not sufficient to impose penalty on a producer or manufacturer. There should be an element of intention to evade payment of duty. Unless the authorities come to the definite conclusion that there was an intention to evade the payment of duty, a penalty cannot be imposed. We have perused the order of the Assistant Commissioner and the Commissioner Central Excise (Appeals). No case of clause (a), (b), (c) or (d) of Rule 25 has been made out. No case of fraud, collusion or any wilful statement or suppression of fact, or contravention of any other provisions of the act or of the rules made therein with the intent to evade the payment of duty, has been made out, which made respondents liable to pay duty as determined under sub-section (2) of section 11AC and liable to pay penalty - No substantial question of law arises - Following decision of COMMISSIONER OF C. EX., GUNTUR Versus ANDHRA CEMENTS LIMITED [2007 (4) TMI 265 - HIGH COURT OF JUDICATURE FOR ANDHRA PRADESH AT HYD] - Decided against Revenue.
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2014 (3) TMI 419
Default of predecessor company - Liability of successor company - Property sold in auction - Held that:- The Central Excise Act provides the mechanism of recovery of excise duties. It permits recovery of such duties from the merchandise of the assessee in his control. It does not permit even recovery from those merchandise, which have gone to the buyers of the assessee. Upon failure to recover the same, the Act permits the dues to be recovered as land revenue. The word ‘land revenue' connotes revenue, which is lawfully recoverable from the person, who is liable to pay the same for his properties. The fact remains that the property in question is not of the assessee, but of the appellant / writ petitioner. Therefore, by taking measures available for recovery of land revenue, dues due and owing by the assessee cannot be recovered from the properties of the appellant, who is a bona fide purchaser in auction - Decided in favour of appellant.
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2014 (3) TMI 417
Waiver of pre-deposit - undue hardship - Held that:- A mere assertion about undue hardship would not be sufficient. It was noted by this Court in S. Vasudeva v. State of Karnataka and Ors. (1993 (3) TMI 350 - SUPREME COURT OF INDIA) that under Indian conditions expression "Undue hardship" is normally related to economic hardship. "Undue" which means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances. If a litigant has got strong prima facie case, then the same can be treated within the fold of undue hardship. But, there are no guidelines in which cases and when undue hardship relatable to prima facie case can be perceived. According to us, it depends upon each and every individual case. Without laying down any exhaustive guidelines, we think that following will be useful for adjudicating the application for waiver of full deposit by the Commissioner as well as this Court - Commissioner has exercised his jurisdiction judiciously as we notice it is in the category of arguable case and the condition of pre-deposit of 50% of the duty demanded is not unjustified. We think that to meet the ends of justice, time granted by the learned Commissioner for depositing of the amount of pre-deposit should be extended. - Decided partly in favour of assessee.
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2014 (3) TMI 416
Availment of CENVAT Credit - Whether appellant can take suo moto credit of excess duty debited for second time payment of duty or they were required to claim in respect of the excess amount debited towards the payment of duty twice over - Held that:- The fact was brought to the notice of the department by the appellants in their letter dated 12th June, 2001. In fact, the letter requests the department for correcting the error. This is a simple arithmetical mistake. The departmental authorities could have advised the appellants to adjust the excess amount towards payment of duty for subsequent periods. But they advised the appellant to file a claim for refund. If at all a refund claim is required, the first letter informing the department of the mistake and requesting for permission to rectify the same should be taken as claim for the purpose of Section 11B. Alternatively, the contention of the appellant that the amount paid by mistake is not duty merits consideration. In fact, duty paid on the goods is indicated in the invoices. The amount erroneously paid in excess does not find mention in any invoices. In that sense, the amount paid should be considered as deposit and not duty - Following decision of BDH Industries Ltd. Vs. Commissioner of Central Excise (Appeals), Mumbai-I [2008 (7) TMI 78 - CESTAT MUMBAI] - Decided in favour of assessee.
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2014 (3) TMI 415
Denial of CENVAT Credit - Manufacturer recipients took cenvat credit on the basis of invoices issued by second stage dealer - Revenue contends that both the first stage dealer and the second stage dealer only issued invoices without the movement of inputs - Held that:- It is observed that no investigation has been done at the end of the manufacture recipients end to the effect that the vehicles used for transport of inputs from second stage dealer to the manufacturers factory were not capable of transporting the inputs received by manufacturer. There is also no evidence on record that manufacturer recipients were aware of the fact that inputs received by them were not the same inputs which were received by the first stage dealer which was sold to second stage dealer without movement of inputs. Except in the case of M/s. Apex Alloys Steel Pvt. Ltd. there is no evidence that cheque payments made were subsequently compensated by the second stage dealer by cash payment after deducting his commission. In the absence of any such evidence cenvat credit cannot be denied to the manufacturer recipients and it cannot be held that extended period of five years is applicable. - cenvat credit is admissible to the manufacture recipients, except in the case of M/s. Apex Alloys Steel Pvt. Limited, on merits as well as time bar. - Decided partly in favor of assessee. Regarding penalties - for the period prior to 01.3.2007 on the first stage dealer or second stage dealer - Held that:- first appellate authority was justified in upholding penalties against appellants even for the period prior to amendment of Rule 26 of the Central Excise Rules, 2002 - levy of penalty confirmed.
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2014 (3) TMI 414
Extension of stay order - Duty demand - allegation of suppression of production and evasion of duty - clandestine clearance - Held that:- actual production of sponge iron; M.S. billets; blooms; rolled products such as channels, angles, beams etc. could be accurately identified only on an integrated analysis of information retrieved from the computer data with the facts inferred from the records maintained by the loading personnel and invoices generated at the weighing station. Such process of an integrated analysis is frustrated by the failure in providing to the appellant a reasonable opportunity, to submit a considering response to the information emerging from the computer data, on account of inadequate time offered for such response, in the facts of the case around twenty days is the time lag between the date the data was furnished and the date of the impugned adjudication order - Matter remitted back for de novo adjudication - Decided in favour of assessee.
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2014 (3) TMI 413
Clandestine clearance - cenvat credit - allegation of receiving unaccounted inputs and used in manufacturing and removal without payment of duty - Duty based upon the scrutiny of the records, maintained by the registered dealer - Revenue officers entertained a view that said registered dealer was issuing only invoices, without the corresponding supplies of the inputs and the payments were being received in cheque and subsequently cash was being returned to the said manufacturers. - Held That:- Entire case of M/s. Jagriti Plastics was non-maintenance of proper accounts for which they have been penalized to the extent of ₹ 25,000/-. If that be so, the allegations and findings in the present case that they have passed on inadmissible Cenvat credit to the present appellants without actually supplying the inputs cannot be upheld. While dealing with the various evidence, the adjudicating authority has observed that Shri Surinder Agarwal, Director of M/s. Jagriti Plastics had at no stage accepted that he has made payments in cash in lieu of cheque received by him. Similarly, he has scrutinized the statement of Shri Kuntal Kumar, who had written and maintained said pidilite diary and has stated that he has no knowledge about cash transactions. There is no statement accepting that the cheque were converted into cash and there was flow back of the money. Similarly, the adjudicating authority has seen the material issue note book and entries made in the private records and the statement of driver and affidavit of the drivers and has come to a conclusion that there is not a single transaction mentioned in the records of Jagriti Plastics that the goods have not traveled from the registered dealer to the manufacturing unit without proper invoices. Accordingly, he has held that department has failed to prove that the goods have not traveled along with invoices and cash has been received in lieu of cheque - Following decision of JAGRITI PLASTICS LTD. Versus UNION OF INDIA [2003 (12) TMI 82 - HIGH COURT OF GUJARAT AT AHMEDABAD] - Decided in favour of assessee.
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2014 (3) TMI 412
Denial of CENVAT Credit - Entitlement of credit by purchaser of the raw-material from the second stage dealer - Credit availed on bogus transactions - Investigations conducted by the Revenue revealed fake transactions between M/s. Khemka Ispat Ltd., the manufacturing unit and M/s. Bhagwati Trading Co., the first stage dealer. If M/s. Khemka Ispat Ltd. has not received the raw-materials and has incorrectly availed the CENVAT credit and has not actually manufactured their final product and has incorrectly utilised the wrongly availed CENVAT credit for payment of duty on their final product - Held that:- in the light of the observations made by the Commissioner (Appeals) as also the factual position that the appellants have received the goods, the burden placed upon them under Rule 7(2) of the CENVAT Credit Rules, 2002 stands discharged. A manufacturer cannot be expected to undertake investigations like Revenue officers and to find out the truth behind the scene. As long as he is receiving the goods from a known dealer under the cover of the invoices and making payments by cheques, he is deemed to have discharged the onus placed upon him under the said rule. Revenue is not disputing the fact of receipt of inputs by the manufacturer. It is also seen that no investigation stands conducted by Revenue from second stage dealer, who has actually supplied the inputs to the appellants. Also, there is no answer by Revenue as to from where the second stage dealer has received the inputs so as to supply the same to the appellants - Following decision of Rishab Industries Vs. CCE & ST, Goa [2007 (8) TMI 657 - CESTAT MUMBAI] - Decided in favour of assessee.
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2014 (3) TMI 411
Condonation of delay - Delay of 50 days in appeal - appellant was in bonafide belief that the appeal filed by the main appellant is sufficient to challenge the impugned order and another appeal need not be filed. - After realizing their mistake, they filed appeal along with an application for condonation of delay - Held that:- Following decision of Sri Vasavi Agencies vs. CCE Visakhapatnam reported in [2007 (11) TMI 544 - CESTAT, BANGALORE] - Condonation denied.
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CST, VAT & Sales Tax
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2014 (3) TMI 444
Exemption from export duty - Inter-State sales of Rectified and Denatured Spirit - Held that:- The decision in Commissioner of Sales Tax UP. Versus M/s. Upper Doab-Sugar Mills Ltd. [2014 (2) TMI 1003 - ALLAHABAD HIGH COURT] followed - United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 is a 'sales tax law' within the meaning of Section 2(i) of Central Sales Tax Act, 1956 - The alcohol being taxable under the 1939 Act, payment of central sales tax on inter-State sale of alcohol not exempted as per provisions of Section 8 (2-A) of the 1956 Act even though there was general exemption under section 4 of the 1948 Act - The orders of the Tribunal in revisions set aside - Decided in favour of revenue. Inclusion of export pass fee in taxable turnover – Exemption of the sale of old boiler Held that:- Judgment in Commissioner of Income-Tax Versus Rampur Distillery And Chemicals Co. Limited [2004 (11) TMI 88 - ALLAHABAD High Court] followed - export pass fee is the liability of the exporter to pay while getting the export permit - there was no liability of payment of export pass fee on the dealer under the Excise Act - No question of treating the export pass fee as part of the turnover – for exemption of the sale of old boiler the decision in Rainbow Steels Ltd. and Another Versus The Commissioner of Sales Tax, Uttar Pradesh, Lucknow and Another [1981 (1) TMI 213 - SUPREME COURT OF INDIA] relied upon – thus there is no need of interference to the observation of tribunal - Decided against revenue.
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2014 (3) TMI 443
Exemption from export duty - Inter-State sales of Rectified and Denatured Spirit - Held that:- The decision in Commissioner of Sales Tax UP. Versus M/s. Upper Doab-Sugar Mills Ltd. [2014 (2) TMI 1003 - ALLAHABAD HIGH COURT] followed - United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 is a 'sales tax law' within the meaning of Section 2(i) of Central Sales Tax Act, 1956 - The alcohol being taxable under the 1939 Act, payment of central sales tax on inter-State sale of alcohol not exempted as per provisions of Section 8 (2-A) of the 1956 Act even though there was general exemption under section 4 of the 1948 Act - The orders of the Tribunal in revisions set aside - Decided in favour of revenue. Inclusion of export pass fee in taxable turnover – Held that:- Judgment in Commissioner of Income-Tax Versus Rampur Distillery And Chemicals Co. Limited[2004 (11) TMI 88 - ALLAHABAD High Court] followed - export pass fee is the liability of the exporter to pay while getting the export permit - there was no liability of payment of export pass fee on the dealer under the Excise Act - No question of treating the export pass fee as part of the turnover – Decided against revenue.
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2014 (3) TMI 442
Exemption from export duty - Inter-State sales of Rectified and Denatured Spirit - Held that:- The decision in Commissioner of Sales Tax UP. Versus M/s. Upper Doab-Sugar Mills Ltd. [2014 (2) TMI 1003 - ALLAHABAD HIGH COURT] followed - United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 is a 'sales tax law' within the meaning of Section 2(i) of Central Sales Tax Act, 1956 - The alcohol being taxable under the 1939 Act, payment of central sales tax on inter-State sale of alcohol not exempted as per provisions of Section 8 (2-A) of the 1956 Act even though there was general exemption under section 4 of the 1948 Act - The orders of the Tribunal in revisions set aside - Decided in favour of revenue. Inclusion of export pass fee in taxable turnover – Held that:- Judgment in Commissioner of Income-Tax Versus Rampur Distillery And Chemicals Co. Limited[2004 (11) TMI 88 - ALLAHABAD High Court] followed - export pass fee is the liability of the exporter to pay while getting the export permit - there was no liability of payment of export pass fee on the dealer under the Excise Act - No question of treating the export pass fee as part of the turnover – Decided against revenue.
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2014 (3) TMI 441
Exemption from export duty - Inter-State sales of Rectified and Denatured Spirit - Held that:- The decision in Commissioner of Sales Tax UP. Versus M/s. Upper Doab-Sugar Mills Ltd. [2014 (2) TMI 1003 - ALLAHABAD HIGH COURT] followed - United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 is a 'sales tax law' within the meaning of Section 2(i) of Central Sales Tax Act, 1956 - The alcohol being taxable under the 1939 Act, payment of central sales tax on inter-State sale of alcohol not exempted as per provisions of Section 8 (2-A) of the 1956 Act even though there was general exemption under section 4 of the 1948 Act - The orders of the Tribunal in revisions set aside - Decided in favour of revenue. Inclusion of export pass fee in taxable turnover – Held that:- Judgment in Commissioner of Income-Tax Versus Rampur Distillery And Chemicals Co. Limited[2004 (11) TMI 88 - ALLAHABAD High Court] followed - export pass fee is the liability of the exporter to pay while getting the export permit - there was no liability of payment of export pass fee on the dealer under the Excise Act - No question of treating the export pass fee as part of the turnover – Decided against revenue.
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2014 (3) TMI 440
Disallowance of input credit under DVAT – transfer of right to use - VAT authority was of the opinion that such input credit was not permissible as the cars have not been resold and only effective control and possession had been transferred to the customers and, therefore, it does not constitute resale in unmodified form. - Waiver of pre-deposit - Held that:- In Carzonrent case [2013 (1) TMI 580 - DELHI HIGH COURT], identical issues and all related questions were dealt with and the submissions of the Revenue was rejected decisively. The Tribunal’s impugned order relies upon Section 9 (9). To this Court’s mind, the understanding of the Tribunal as to its applicability appears to have been based upon a misreading of judgment passed in Carzonrent The omission to enact a similar provision in respect of different categories of sale transactions on the one hand, and the enactment of Section 2 (zd) (iii) which specifically deals with sale price in respect of transfer of the right to use, coupled with Section 2 (zm) ("turnover") - turnover is aggregate of sale price, point to legislative deliberation that the theory of proportionality sought to be propounded by the revenue - accepted by the Tribunal, has no statutory basis - Once the legislature entitles the assessee to a certain benefit of input credit, and puts in place a mechanism for working it out, which expressly provides one kind of proportional input credit, to a class of transactions - it is not permissible for the Court to read into the statute another such proportional rule, without statutory sanction Ex facie, the view of the Tribunal with regard to the disallowance of input tax credit appears to be incorrect. - the order rejecting the application for waiver of pre-deposit is set aside - Matter remitted back to Tribunal – Decided in favour of assessee.
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Indian Laws
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2014 (3) TMI 435
Power of make inquiry for hiding the information sought under RTI Act - RTI Application seeking an authenticated photocopy along with the file notings of the Project Report for Development of Ayurvedic Health Resort and Herbal Garden at Vagamon, which was submitted by the Department of Tourism, Government of Kerala in December, 2005 - Held that:- Since the Commission has the power to direct disclosure of information provided, it is not exempted from such disclosure, it would also have the jurisdiction to direct an inquiry into the matter wherever it is claimed by the PIO/CPIO that the information sought by the applicant is not traceable/readily traceable/currently traceable. Fear of disciplinary action, against the person responsible for loss of the information, will also work as a deterrence against the willful suppression of the information, by vested interests. It would also be open to the Commission, to make an inquiry itself instead of directing an inquiry by the department/office concerned. Whether in a particular case, an inquiry ought to be made by the Commission or by the officer of the Department/office concerned is a matter to be decided by the Commission in the facts and circumstances of each such case. The inquiry conducted by the petitioner in compliance of the order passed by the Commission on 17-4-2012 was not at all satisfactory. It is, therefore, directed that a thorough and meaningful inquiry in terms of the provisions of the directions of the Commission be carried out by an officer not below the rank of a Joint Secretary to the Government within eight weeks from today and a copy each of the said report shall be provided to the Commission as well as to the respondent before this Court. - Decided against the petitioner / Union of India.
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